Draft for panel reports - World Trade Organization

World Trade
Organization | | |
| | |
| |WT/DS266/R |
| |15 October 2004 |
| |(04-4216) |
| | |
| |Original: English |
EUROPEAN COMMUNITIES - EXPORT SUBSIDIES
ON SUGAR COMPLAINT BY BRAZIL Report of the Panel TABLE OF CONTENTS
PAGE I. Introduction 1 1. Terms of reference 1
2. Panel composition 1
3. Third parties 2
4. Organizational meeting 2
5. Meetings with the parties and third parties 2
6. Reports 2 II. Preliminary rulings by the Panel and other issues 3 1. Notification of third parties' interest 3
2. Third parties enhanced rights 3
3. Request for additional working procedures for the protection of
proprietary information 4
4. Amicus curiae 6
5. Breach of confidentiality 6 III. Factual Aspects 7 1. Product coverage 7
2. Quotas 7
3. Intervention price 8
4. Basic and minimum prices 8
5. Basic production levy and B levy 9
6. Import and export licences 9
7. Export refunds 9
8. Management Committee for Sugar 9
9. Commitments 9
10. Preferential import arrangements 10
11. Review 10 IV. Main Arguments 10 A. Parties' Requests for findings 10
B. Terms of reference 14
1. Provisions and measures at issue 14
2. Procedural matters 17
C. Burden of Proof 17
1. Quantitative aspect 18
2. Export subsidization aspect 19
D. C Sugar 20
1. Article 9.1(c) of the Agreement on Agriculture 20
(a) "Payment" 20
(b) "Financed by virtue of governmental action" 31
(c) "payment on the export" 35
2. In the alternative, Article 10.1 of the Agreement on Agriculture
39
(a) Item (d) of the Illustrative List of Export Subsidies 39
(b) Article 1.1 of the SCM Agreement 42
3. Good faith 45
(a) Exports of C sugar were consistent with the reduction
commitments 45
(b) Good faith and estoppel 53
E. acp/india "equivalent" sugar 60
1. Article 9.1(a) of the Agreement on Agriculture 60
2. Exemptions through unilateral insertions in Schedules 62
3. Application of the footnote to "ACP/India equivalent sugar" 73
4. Good faith and estoppel 76
F. Article 3 of the SCM Agreement 78
G. Nullification or Impairment 85 V. Arguments by Third Parties 89
VI. INTERIM REVIEW 111 A. editorial and other changes 111
B. terms of reference 111
C. there are no "c sugar producers" and no "C beet growers" as such
112
D. A reference to the european communities' commitments for budgetary
outlays 113
E. panel's exercise of judicial economy over the scm claims 113 VII. FINDINGS 114 A. main claims and general arguments of the parties 114
B. procedural issues in this dispute 114
1. The European Communities' challenges of the Panel's jurisdiction
under its terms of reference 114
(a) The timing of objections to the Panel's jurisdiction
115
(b) The Complainants' requests for establishment of a panel
116
(c) Alleged lack of proper identification of the "measures"
covered by the claims under Article 10.1 of the Agreement on
Agriculture 119
(d) Alleged lack of proper identification of "payments" as
distinct measures or distinct claims under Articles 3, 8 (and
9.1(c)) of the Agreement on Agriculture 119
(i) Arguments of the parties 119
(ii) Assessment by the Panel 121
(e) Alleged lack of proper identification of "claims" under
Article 9.2(b)(iv) of the Agreement on Agriculture 124
(i) Arguments of the parties 124
(ii) Assessment by the Panel 124
(f) Alleged lack of proper identification of claims in
relation to Footnote 1 to the EC's Schedule (ACP/India sugar)
125
(i) Arguments of the parties 125
(ii) Assessment by the Panel 126
2. European Communities' allegation that the Complainants are
"estopped" from pursuing this dispute 127
(a) Arguments of the parties 127
(b) Assessment by the Panel 128
3. The amicus curiae of WVZ 131
(a) Factual background 131
(b) Assessment by the Panel 132
4. Breach of confidentiality 133
(a) Factual background 133
(b) Assessment by the Panel 134
C. order of analysis by the panel 135
D. The European Communities' export subsidy commitment levels for
subsidized exports of sugar 136
1. Introduction 136
2. What is the European Communities' commitment level in light of
the ACP/India sugar Footnote? 137
(a) Arguments of the parties 137
(b) Assessment by the Panel 139
(i) Introduction 139
(ii) The obligations of the Agreement on Agriculture with
respect to export subsidies - Articles 3, 8 and 9 of the
Agreement on Agriculture 140
(iii) The interpretation of terms included in WTO Members'
Schedules 144
Provisions of a Member's Schedule should be interpreted as
treaty provisions 144
Effective treaty interpretation 146
(iv) The issue of "conflict" between provisions of a
Member's Schedule and provisions of the Agreement on
Agriculture 147
(v) Interpretation of the European Communities' Footnote 1 on
ACP/India sugar: 150
Footnote 1 does not contain any "limitation" on export
subsidies of ACP/India sugar 151
Footnote 1 does not provide for any commitment for sugar
"equivalent" from ACP/India 154
Conclusion 155
Can the ACP/India Footnote be regarded as a second
component of the European Communities' commitment level
that would not be subject to reduction per se but that
would form part of the overall European Communities'
commitment level which has been reduced? 155
The ACP/India Footnote does not contain any budgetary
outlays so it cannot consist of an export subsidy
consistent with the Agreement on Agriculture 157
(vi) Conclusion on the legal value and effect of the
ACP/India sugar Footnote 158
3. Was the European Communities authorized to deviate from the
Agreement on Agriculture's basic obligations through a negotiated
departure from the Modalities Paper? 158
(a) Arguments of the parties 158
(b) Assessment by the Panel 159
4. Conclusion on the European Communities' commitment level for
exports of subsidized sugar 163
E. Is the European Communities exporting subsidized sugar in quantities
exceeding its level of commitment contrary to Articles 3, 8 and 9 of
the Agreement on Agriculture ? 163
1. The burden of proof of Article 10.3 of the Agreement on
Agriculture 163
2. The application of the special rule on the burden of proof to
this dispute 165
(a) The quantitative aspect 165
(b) The subsidization aspects of the claim 165
3. Has the European Communities demonstrated that its exports of
ACP/India equivalent sugar are not subsidized? 165
(a) Arguments of the parties 165
(b) Assessment by the Panel 166
4. Has the European Communities demonstrated that its exports of
C sugar are not subsidized? 166
(a) Introduction 166
(b) Arguments of the parties 167
(c) Assessment by the Panel 168
(i) The Panel's understanding of the EC sugar regime 168
(ii) Article 9.1(c) of the Agreement on Agriculture
169
(iii) Does the sale of C beet to C sugar producers
constitute a payment on export financed by virtue of
governmental action? 170
Is there a payment? 170
Is such payment-in-kind through sales of below-costs C
beet made "on the export"? 174
Is the payment-in-kind through sales of below-cost-C beet
"financed by virtue of governmental action" ? 175
Conclusion 179
(iv) Does the cross-subsidization resulting from the
EC sugar regime constitute a payment on exports by virtue
of governmental action? 179
Does the cross-subsidization from the EC regime cons